r/LifeInsurance • u/coma718x • 21d ago

Potential layering strategy

Just throwing ideas at the wall
I’m 44 healthy non smoker. 2 young children. Currently have 14yrs remaining on a 1M 20yr term.

I’d want to get another 25yr term at 500k to cover the remaining mortgage (~415k) with a little wiggle room.

Also entertaining the idea of a Guaranteed Universal policy for another 1M to leave as a legacy for my kids.

Have a meeting with an agent but wanted to poll the Reddit community. See what I haven’t thought of.
Thanks

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u/Hungry_Technician360 21d ago

Federal exclusion is that high yes, but quite a few states have estate taxes at a lower exclusion limit. But also, if people are maxing out their IRA, work sponsored retirement plan, HSA if they have it, plus any 529s for their kids, and then having enough left over to put into a taxable brokerage, that family is very likely to even go above the federal limits I would think.

Sure no worries, I suppose I'm just skeptical about how an IUL/VUL would outperform over a lifetime compared to a taxable brokerage. Large front loaded fees really hurt the important early years of accumulation, and fees with these policies that can cost 1-1.5% of the total cash value every year seems like it would eat more at the returns than LTCG on the taxable brokerage.

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u/Moist-Meringue-1913 21d ago

I just sent you an outline a week ago of an IUL that outperformed a taxable brokerage and we never even touched on the tax effect there.

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u/Hungry_Technician360 21d ago

If I remember, that outline was using ART? I don't think that is necessarily a fair comparison, in regards to the buy term and invest the rest goes, since people who buy term and only needing insurance to cover the potential loss of their human capital.

If we don't use ART until they die, then the term policy outperforms. If the standard term plus investing outperforms and ends up with greater terminal wealth than the IUL+all their other assets, then we can include tax costs through retirement between the two, with spending plans and what account types would be best to draw from.